TURKEY IS A COUNTRY WHERE MANY TYPES OF DISASTERS OCCUR FREQUENTLY, PLACING US IN THE "HIGH RISK" GROUP OF COUNTRIES. REDUCING THIS HIGH RISK IS POSSIBLE WITH EFFECTIVE DISASTER MANAGEMENT ESTABLISHED BY RELEVANT INSTITUTIONS AND ORGANIZATIONS.
Tamer Saka
Chairman of the Board, Turkish Corporate Governance Association
Co-founder and Board Member, BMS Group
We would like to get to know you better, Mr. Tamer. Could you share your educational background and the transition from education to your professional career?
I completed my undergraduate, master's, and doctoral studies at Istanbul University, Faculty of Business Administration. Following that, I worked as a Manager and Senior Manager responsible for Risk Management Consulting services at Arthur Andersen and Ernst & Young firms. In 2004, I continued my career as the Risk Management Director at Sabancı Holding. Between 2010 and 2011, I served as the Executive Director responsible for business development activities in approximately 20 countries, including Turkey, at Willis in London. In 2011, I joined Kibar Holding as the Coordinator of Strategy and Business Development, Automotive and Corporate Functions Group President, CEO, and Member of the Board of Directors. In 2018, I served as the President of the Cement Group at Sabancı Holding. Since September 1, 2021, I have been serving as a Founding Partner and Member of the Board of Directors at BMS Group. Additionally, I am the Chairman of the Board of Directors at TKYD and a Board Member at YÜNSA.
How did your path cross with BMS? Could you please tell us about your role at BMS as a valuable executive who has made significant contributions to the development of the Risk Management profession and subject?
During my tenure as a Risk Management Consultant at international audit firms and as the Risk Management Director at Sabancı Holding, I was heavily involved in insurance due to managing all risk and insurance processes within the group.
With my Turkish partners Servet Gürkan and Kerem Gürkan, who are highly experienced insurance professionals and brokers with partnerships and leadership roles in major insurance companies worldwide, we decided to establish a brokerage business. We partnered with BMS, a dynamic global broker offering specialized insurance, reinsurance, and capital market consulting services, to embark on this journey together.
As BMS Turkey, we combine BMS's proven market experience of over 50 years with local expertise to provide tailor-made solutions to our clients by identifying their needs collaboratively. We are committed to delivering fast and flawless service to our clients with our operational excellence and technology-driven solutions in risk consultancy, portfolio management, and insurance reinsurance placement activities. We strive to meet our
clients' needs in complex risk segments in the best possible way.
"Furthermore, awareness should be raised among companies about the risks of disasters and emergencies they face and awareness should be developed among middle and senior managers to make them competent and strategic in Disaster and Emergency Management decision - making"
Turkish Corporate Governance Association (TKYD) has been working since 2003 with the mission of recognizing, developing and implementing the corporate governance approach with best practices in our country. If we asked you to summarize the process of the association until 2024...
Since our establishment in 2003, we have been continuing our efforts towards the recognition, adoption, and implementation of corporate governance principles in Turkey, which are indispensable elements of sustainable development.
Taking into account the prevalent structure of family owned companies where a specific individual or family holds the majority share, our priority has been to make the best practices established internationally applicable to such organizations. Organizing over 80 panels and training programs in nearly 40 cities nationwide over the past 20 years has enabled TKYD to accumulate significant expertise in this regard and provide information on the subject to over 4,000 shareholders and executives.
Our activities related to the capital markets mainly involve providing opinions to regulators and conducting educational programs and meetings aimed at ensuring a common understanding of the regulations. Seventy-three of our institutions are listed on the BIST Corporate Governance Index, and we will continue our efforts to further develop this index. While supporting companies in being governed by corporate governance principles, TKYD takes pride in the social development and economic growth that arises from the increased profitability, performance, competition, and employment strength. TKYD currently has more than 150 corporate members.
Recognizing that corporate governance is not solely applicable to companies, we have prepared guides for organizations with different statuses, which have brought significant insights. Examples of these guides include the "TKYD TAİDER Research Report: Perspectives of the Next Generation on Work," "Corporate Governance Experience in the Earthquake Process Survey," "Turkish Corporate Governance Compass," "The Role of Board Committees in Corporate Governance,"Management Guide for the Turkish Football Industry," "Corporate Governance Handbook for Economic Journalists," and "Management Guide for Civil Society Organizations."
These studies are conducted in collaboration with our members through our working groups, which greatly contribute to the activities of the association. We collaborate with international organizations such as the OECD, International Finance Corporation, World Bank, and Center for International Private Enterprise in many projects. Additionally, we aim to increase our effectiveness by closely working with numerous civil society organizations in our country.
Turkey is a country prone to disasters, and a major earthquake is expected in Istanbul soon. Could you please talk about the importance for companies to increase their awareness of disaster risks and to internalize Emergency Management as a corporate culture from the Chairman of the Board to all levels of management?
Unfortunately, Turkey has experienced devastating earthquakes throughout centuries, and we will face many more major earthquakes in the coming period. Therefore, it is crucial for us to make Turkey the best, fastest, and most comprehensive country in the world in terms of earthquake response.
During my tenure as the Chairman of TÜRKÇİMENTO, we prepared a "Turkey Earthquake Preparedness Roadmap" report regarding the possible impacts of the Istanbul earthquake and the necessary precautions to be taken. In the prepared Earthquake Roadmap Report, 8 main themes were identified, and specific solutions were proposed for each area. The 8 main areas covered in the study were "Financing/Incentives, Public Awareness, Building Structural Testing, Building Strengthening Activities, Building Inspection, Legislation, Owner Interaction, Use of New Technologies." The studies conducted in Turkey and the Marmara Region on these themes, their adequacy, and the successful examples that can be implemented in our country were identified through surveys and interviews conducted with participating NGOs.
After studying the works of countries with similar earthquake risk profiles and on going activities in this field, successful examples that could be implemented in our country were determined. As a result of these studies, potential solution proposals that could be applied in the short/medium/long term in the region, along with the necessary financial calculations for transformation in Istanbul, were put forward.
Following the earthquakes in 1999 and 2023, a "Corporate Disaster Management" model should be adopted and implemented in Turkey. It is essential to value the efforts made so far in this regard and to ensure that they continue to increase, with the hope that our country will soon move into the class of "countries that minimize disaster losses."
When we include Kocaeli and Bursa alongside Istanbul, these three cities, which constitute approximately 40% of the country's income, have a very high population density. After a possible Istanbul earthquake, there is a high probability of not only losing lives in these three cities, where approximately 20% of the country's population lives, but also experiencing economic losses that will be extremely difficult to compensate.
It is possible to make different calculations, but today, it can be expected that the Istanbul earthquake will cost the Turkish economy nearly $500 billion in the first year alone. Including the subsequent years of reconstruction, we are talking about a magnitude of $1.2 trillion. Considering Turkey's economic structure, it seems very difficult to solve this problem for decades.
To combat disasters, policies and strategies need to be developed at different levels to take necessary measures with much lower costs. Especially with some incentives provided by the state, there should be a shift towards producing in sturdy buildings and areas, reducing the density in the industry.
When comparing the cost of moving a factory to a safe zone in case of damage to the cost of damage incurred, you will see that the cost of relocation is less.
How conscious are corporate companies about disasters? What are your recommendations for establishing an effective Emergency Management structure with competent and strategic decision makers at middle and senior management levels to manage potential risks
systematically and data-driven?
Corporate companies are aware of disasters, but they are not adequately prepared. Emergency plans are prepared as part of the quality systems, but I believe that the ratio of plans prepared from a practical perspective is low. We don't know when and where we will encounter an earthquake. Therefore, we need to develop models that will work according to different scenarios and test these models. The impact of each earthquake will be different and cannot be compared with each other. Regardless of the magnitude of the earthquake, there must always be Plan A, Plan B, and Plan C. Sometimes, a plan that looks perfect on paper may not be beneficial in practice. For example, if you need to pass through a viaduct to reach a place after an earthquake, you need to seriously consider the possibility and scenario of that viaduct being damaged. If everything depends on passing through there and the viaduct collapses or is damaged, then your entire plan becomes worthless.
The term "disaster management" encompasses all efforts that allow individuals to be aware of natural events occurring in their environment, understand them in detail, and be able to remain unaffected or minimally affected by these events in case of recurrence.
Turkey is a country where many types of disasters occur frequently, placing us in the "high risk" group of countries. Reducing this high risk is possible with effective disaster management established by relevant institutions and organizations.
Administrations have very important tasks after a disaster, including ensuring the safety of citizens' lives and property, restoring their living conditions to normal as soon as possible, and mitigating the economic, social, and psychological losses caused by the disaster. Disaster awareness is also developed in advanced countries, where significant efforts are made in this regard. However, it's essential to remember that managing a disaster involves not only resolving a crisis after it occurs but also preparing for it beforehand. In the Republic of Turkey, there are indeed significant legal efforts in this direction; however, unfortunately, we see that they are not fully implemented in practice.
In the context of Disaster Risk Reduction, it is necessary to establish a Standardized Emergency Management System to enhance companies' abilities to prevent and detect all hazards and threats they face and to prepare for, respond to, recover from, and mitigate the effects of disasters and emergencies, and to provide resources. Furthermore, awareness should be raised among companies about the risks of disasters and emergencies they face, and awareness should be developed among middle and senior managers to make them competent and strategic in Disaster and Emergency Management decision-making.
With the increasing risk factors in the global economic environment, risk engineering has become an institutional characteristic within companies. In this context, how would you summarize the concept of risk engineering and its importance for companies? What are the benefits of risk engineering for companies?
There are many risks that affect corporate companies' sustainable growth goals, with operational risks being one of them. Ensuring that operations continue at the most appropriate cost without causing harm to employees and the environment is the responsibility of those managing the operations.
Risk engineering, in essence, involves informing the managers responsible for operations about the potential risks the company faces, explaining the steps that need to be taken to mitigate these risks before they turn into hazards, and the possible costs involved.
From an insurance perspective, risk engineering has a different meaning. Insurance companies engage in a risk partnership with companies, as they purchase risks within a certain price range. For example, for a factory to understand all disaster and emergency risks, including earthquakes, fires, and floods, it is essential to work with a risk engineer.
Insurance companies may take measures, such as not insuring companies that take on too much risk or do not manage their risk effectively, or they may choose to insure them at very high premiums. In this sense, I believe there is much more room for development in risk engineering in the field of risk management.
Considering BMS Group's goals for 2024, what is on Tamer Bey's risk agenda, and what measures have you taken for these risks?
As of the foreseeable future, from 2024 nwards, we have entered a period globally where risks are intense and complex. In today's business world, it is not easy to instill and guide risk awareness in our companies and institutions. Therefore, companies like ours, providing consultancy support in risk management and insurance, have even greater responsibilities.
At BMS, we are aware of this responsibility due to the international experience of our founders in risk management and insurance. As a solution partner, we are committed to providing our customers and business partners with innovative and creative solutions based on technology to understand, recognize, and manage potential risks that may hinder their sustainable growth goals. We will continue to utilize our knowledge of local and global risk markets to secure the most complex risks correctly and develop solutions tailored to our customers' needs.
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